Higher housing costs have caused the market to slow from its previously hot pace.
Joe Raedle/Getty Images
Zillow Group
ended its iBuying business in 2022, and announced its intention to “build the housing super app.” The company reported earnings that beat estimates, sending shares higher in after-hours trading.
Zillow
(ticker: Z) on Thursday reported fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, from continuing operations of $73 million on revenue of $435 million. Analysts had anticipated Ebitda of $61 on revenue of $414 million, according to FactSet. Despite the beat, Ebitda and revenue from continuing operations were 19% and 53% lower, respectively, than the same quarter in 2021, according to the release.
The news sent shares higher in after-hours trading.
Zillow
stock was up about 3% Wednesday evening.
The report comes amid shifts in both the housing market and the company. Broadly, higher housing costs have slowed the market from its previously-hot pace.
Housing costs remain in focus in 2023, CEO Rich Barton and CFO Allen Parker wrote in a shareholder letter. Mortgage rates have come down from their highs last year and the company has “some early signs of stabilization, albeit at a meaningfully subdued level,” they wrote. “However, we aren’t out of the woods yet when it comes to the macro economy and how it may affect the real estate industry.”
Zillow has exited its iBuying program in which it purchased and sold houses, and said in the shareholder letter that it cut roughly 2,000 jobs from its approximately 8,000-person workforce.
“While navigating a slow and difficult housing market in 2022, we kept our eyes on the future—our vision of building the housing super app,” the executives said in a release. Such an app would help with a variety of real estate needs including buying, selling, and financing. Customers want an application that “integrates all of these disparate pieces of the move, all these difficult, uncoordinated things that people have to track and do,” Barton said on the company’s earnings conference call. “It seems very logical to us that we ought to be able to bring that all into a single application.”
Zillow beat its previous consolidated revenue expectations, which called for revenue from continuing operations in a range from $395 million to $425 million. “We’re building momentum that will help us scale as we serve customers and the industry with an easier, more seamless way to transact in real estate.”
In the letter, Zillow said it expects first quarter consolidated revenue from continuing operations in a range of $404 million to $437 million, and adjusted Ebitda from continuing operations between $48 million and $63 million.
With its Zillow Offers program discontinued, the company highlighted products it’s trying out in markets including Raleigh, Denver, Atlanta, and Phoenix. Zillow said it expanded its real-time touring option in Atlanta, and is beginning the program in its other test markets. It also launched a partnership with
Opendoor Technologies
(OPEN) in Atlanta and Raleigh.
“Customers who start their selling journey with Zillow can now simultaneously request a cash offer from
Opendoor
and receive an estimate of their open-market home sale price with a local Premier Agent partner,” the shareholder letter said. Zillow also said it is investing in its home loans programs and additional tools for sellers.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
Credit: marketwatch.com